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Seplat Says Mobil Acquisition on Track, Divests Ubima Operations for $55m

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Seplat Energy says the proposed acquisition of Mobil Producing Unlimited, Nigeria (MPNU) remains on track as necessary regulatory approvals are being anticipated.

“We expect completion to occur in the second half of 2022 and MPNU will then operate as a standalone subsidiary of Seplat Energy,” the firm said in a statement accompanying its first quarter (Q1) 2022 financial statements.

Seplat also announced the divestment of the Group’s interest in the Ubima marginal field, which reduces the company’s 2P reserves by 2 million barrels of oil equivalent (MMboe) to 455 MMboe.

A settlement agreement of $55 million has been agreed with All Grace Energy Limited (AGEL) and the company says it expect to receive payments in due course.

The addition of MPNU will nearly treble our production and double our reserves on a pro forma 2020 basis. The acquisition will reinforce our leadership of Nigeria’s indigenous energy sector and enabling us to generate strong future cash flows that will underpin our investment in Nigeria’s energy transition and improve our overall stakeholder returns,” Roger Brown, Chief Executive Officer, of Seplat Energy said.

“It will also bring a significant undeveloped gas resource base which, alongside our ANOH gas project development, will underpin Nigeria’s energy transition and drive domestic and export revenues when developed.”

The Seplat Energy Board approved exit from the Ubima asset in April 2022. The Ubima asset, operated by All Grace Energy Limited (AGEL) was acquired in 2019 as part of the Eland acquisition.

Ubima is in a high operating cost environment, with major evacuation challenges currently being experienced in the Niger Delta.

Because substantial capital expenditure was required to create more secure evacuation routes, the decision to exit will enable Seplat to invest in other parts of its business that generate higher returns.

Current reserves in Ubima stand at approximately 2 MMbbls and necessary adjustments to the financial statements will be made in the second quarter and reported in the 6M 2022 results, Seplat said.

Revenue from oil and gas sales in 3M (Jan – Mar) 2022 was $241.8 million, a 58.6% increase from the $152.4 million achieved in 3M 2021.

Adjusted for an underlift of $13.6 million, total revenues were $255.5 million. Crude oil revenue was 74.2% higher at $216.2 million, compared to 3M 2021 of $124.1 million, reflecting higher average realised oil prices of $97.53/bbl for the period.

The total volume of crude lifted in the year was 2.2 MMbbls, higher than the 2.1 MMbbls lifted in 3M 2021.

The profit before tax was $83.4 million (3M 2021: $28.0 million), while profit for the period was $19.9 million (3M 2021: $24.9 million). In Q1 2022 the Group received $95.0 million from the JV partners towards the settlement of cash calls. The major JV receivable balance now stands at $51.0 million, down from $83.9 million at the end of 2021.

Seplat Energy Plc is Nigeria’s leading indigenous energy company. It is listed on the Nigerian Exchange Limited (NGX: SEPLAT) and the Main Market of the London Stock Exchange (LSE: SEPL).

Seplat Energy is pursuing a Nigeria-focused growth strategy through participation in asset divestments by international oil companies, farm-in opportunities, and future licensing rounds. The Company is a leading supplier of gas to the domestic power generation market.

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